Every year, the average company loses 10% to 40% of its customers. Every lost customer can mean lost revenue opportunities and lost referrals — if you give up on them. Don't throw away a meaningful relationship.

Sizing up the suitors
More and more companies are realizing the value of pursuing former customers and saving those who may leave. There are various reasons for defection — unhandled complaints, poor customer service, poorer product offerings — but the focus for many companies is increasing competition. With the Internet and a barrage of advertising, it's easier than ever for consumers to compare prices and services. And your competitors are more than willing to swoop in and court your best customers.

Businesses in all industries can identify why customers left in the first place, and then plan their response. Delta Air Lines has conducted focus groups to find out why customers are leaving for low-cost carriers; they're now exploring everything from in-flight television to an upgraded Web site to an expansion of their low-fare subsidiary, Song. Cable systems are famous for winning back subscribers by buying their satellite dishes and offering discounted service packages. And even fast-food chain Hardees decided to own up to a reputation of poor service and "skinny" burgers — a summer ad campaign touted a complete makeover that includes new, beefier "thickburgers."

Weighing your investment
Anyone who has bought from you before is more valuable than any 10 prospects who might make a purchase. Getting back the high-value customer who just left will give you more of a return than acquiring a new customer.

But not all lost customers are equal. There are some you intentionally dropped, and some who offered you a very beneficial relationship. The 80/20 rule applies here. Identify those customers who are most likely to have a high-quality "second marriage" or lifetime value.

Wooing them back
The key to an effective win-back campaign is understanding why your best customers left in the first place and what they are looking for now. Dialogue through surveys, focus groups and personal contact can give you priceless information about your business.

Once you analyze the reasons for defecting, target segments with direct, specific communication that will breathe new life into the relationship. Promise that you've changed, but make the offer believable. Test your strategy on a small group before a larger rollout is planned, and measure your results.

Win-back strategy should be a regular component of your retention and loyalty programs. Of course, you'd prefer that customers didn't leave in the first place. The way to combat attrition is ongoing communication with your customers. And it is a two-way conversation.

Reprinted from Strategies newsletter, 4th Quarter © Nov. 2003 by First Marketing, 3300 Gateway Drive, Pompano Beach, FL 33069.

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